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On the 3rd of July, 1638, George Garrard  wrote Viscount Wentworth to tell him:

The Plague is in Cambridge; no Commencement at either of the Universities this year.

On October 2nd of that same year, Cambridge canceled all lectures. Even if history does not repeat (but historians do), one is tempted to look to the past for hints about the future.

From the Annals of Cambridge  (compiled by Charles Henry Cooper ) we learn that the plague combined with the residency requirements for a degree at Oxford, prompted a rush of Oxford students to Cambridge to obtain their Masters of Arts degree. We know this from an anonymous letter to Oxford’s Chancellor:

…..many of Batchelor of Arts of Oxford came this Year for their Degrees of Masters of Arts here, which this Year they could not obtain at Oxford, which I endeavored to prevent……..

This prompted a complaint to Cambridge. Its vice-chancellor replied,

I Pray receive this assurance from me, and I doubt not but the Practice of our University will make it good……

Oxford, in the meantime, maintained country homes for its scholars where they could hide from the Black Death. The plague lowered property values which allowed the colleges to expand their land holdings.

What effect on the intellectual life of the University? Anna Campbell’s 1931 book entitled `The Black Death and Men of Learning‘ estimates that about a third of European intellectual leaders perished during the plague and Universities were in a precarious position.

James Courtenay, writing in 1980  with access to more detailed data about Oxford suggests a less bleak outcome.

The mortality rate was not particularly high , either of brilliant or of marginal scholars and masters. The enrollment levels across the next few decades do not seem to have been seriously affected.

He notes an argument for a drop in the quality of higher education but that would have been a response to a drop in the quality of primary education.

Some days ago I learnt that a job offer to a promising postdoc I advise evaporated. Not unexpected in these times, but disappointing nevertheless . There are now about 300 Universities with hiring pauses or freezes in place.

For Universities that are tuition driven, this is understandable. For those with large endowments of which a large portion are unrestricted this is puzzling. It is true that about 75% of all US university  endowment funds are invested in equities and these have declined since the start of the pandemic. But, the 3 month treasury rate is, at the time I write this, at 0.22%. Why aren’t they borrowing? More generally, why don’t we see consumption smoothing?

An interesting paper by Brown, Dimmock, Kang, and Weisbenner (2014) documents how University endowments respond to shocks. They write:

Our primary finding is that university endowments respond asymmetrically to contemporaneous positive and negative financial shocks. In response to contempo- raneous positive shocks, endowments tend to leave current payouts unchanged. Such behavior is consistent with endowments following their stated payout policies, which are based on past endowment values and not current returns, in order to smooth payouts (e.g., pay out 5 percent of the past three-year average of endowment values).

However, following contemporaneous negative shocks, endowments actively reduce payout rates. Unlike their response to positive shocks, this behavior is inconsistent with endowments following their standard smoothing rules. This asymmetry in the response to positive and negative shocks is especially strong if we explicitly control for the payout rate that is implied by the universities’ stated payout rules (something we do for a subsample of the endowments for which we have sufficient information to precisely document their payout rules). We also fail to find consistent evidence that universities change endowment payouts to offset shocks to other sources of university revenues. These findings, which we confirm through several robustness checks, suggest that endowments’ behavior differs from that predicted by several normative models of endowment behavior.

They argue that their data supports the idea that Universities are engaged in endowment hoarding, i.e.,  maintenance of the endowment is treated as an end in itself. The Association for American Universities argues that endowment hoarding is a myth, see item 9 at this link.  Their response confirms the 3 year average rule but is silent on the asymmetric response to shocks reported above.

More generally, one might ask what is the purpose of a University endowment? Hansmann (1990) offers an interesting discussion of why a University even has an endowment (other enterprises are run through a mixture of debt and equity).  Tobin (1974) articulated one for modeling purposes which I suspect captures what many have in mind:

The trustees of an endowed institution are the guardians of the future against the claims of the present. Their task is to preserve equity among generations. The trustees of an endowed university … assume the institution to be immortal.

If one takes the principle of intergenerational equity seriously, then, would it not make sense to borrow from a better future into a worse present? Unless, of course, it is expected that the future will be even worse than today.

With the move to on-line classes after spring break in the wake of Covid-19, my University has allowed students to opt to take some, all or none of their courses as pass/fail this semester. By making it optional, students have the opportunity to engage in signaling. A student doing well entering into spring break may elect to take the course for a regular grade confident they will gain a high grade. A student doing poorly entering into spring break may elect to take the course pass/fail. It is easy to concoct a simplified model (think Grossman (1981) or Milgrom (1981)) where there is no equilibrium in which all students elect to take the course pass/fail. The student confident of being at the top of the grade distribution has an incentive to choose the regular grading option. The next student will do the same for fear of signaling they had a poor grade and so on down the line. In equilibrium all the private information will unravel.

This simple intuition ignores the heterogeneity in student conditions. It is possible that a student with a good score going into spring break may now face straitened circumstances after spring break. How they decide depends on what inferences they think, others, employers, for example, make about grades earned during this period. Should an employer simply ignore any grades earned during this period and Universities issue Covid-19 adjusted GPAs? Should an employer conclude that a student with a poor grade is actually a good student (because they did not choose the pass/fail option) who has suffered bad luck?

In response to the Covid-19 virus a number of American Universities are moving instruction on-line. Some see this as great natural experiment to test the efficacy of virtual instruction (NO). Others believe it will speed the pace at which instruction  moves on-line (NO). The focus now is on execution at scale in a short period of time.  We would be better off canceling the rest of term and giving all the students A’s.

Here is what I predict will happen. Students will be dilatory in viewing lectures. Temptation and the difficulty of adjusting to new habits will be obstacles. When the exams approach, some will complain that they are unprepared because virtual is not as good as live, their instructor made a hash of things, the absence of live office hours, etc. etc. The exams will be take home without any proctors. While one’s own spirit is willing, there are doubts about the rectitude of one’s classmates.

On the other hand, during this period of exile, perhaps, there will emerge another Newton.


Six years ago, I decided to teach intermediate microeconomics. I described my views on how it should be taught in an earlier post. The notes for that course grew into a textbook that is now available in Europe and in the US this April. I am particularly delighted at being able to sport Paolo Ucello’s `The Hunt’ upon the cover. The publishers, Cambridge University Press, asked me to provide an explanation for why I had chosen this, and it appears on the rear cover. Should you make your way to Oxford, be sure to stop by the Ashmolean Museum to see it, the painting of course, in all its glory. I day dream, that like Samuelson’s `Economics’, it will sell bigly.


Hot on the heels of its new Division of Linear Algebra, Empire State’s President announced a new Institute for Wow. Unlike other centers and institutes on campus that were dedicated to basic research or innovation, this one would focus only on research that would grab attention. “Universities,” she said, “ have tried for centuries to inform and educate. We’ve learnt in the last decade from all the data collected that this just annoys the students, frustrates the professors and bores donors. Instead,” she continued, “we are going to entertain.” She went on to say that the institute would jettison traditional measures of impact and significance and focus on media mentions, `likes’ and `followers’. The president emphasized that this was in keeping with Empire State’s mission to be not just the best University in the world, but the best University for the world. “On the increasingly long road from birth to death we want to make sure that people are not bored,” she said.

The Institute for Wow will be directed by celebrity academic Isaac Bickerstaff one of the new breed of `click-bait’ style scholar that Empire hopes to attract. Bickerstaff first shot to fame with his `named cheese’ experiment. He took a large wheel of cheddar cheese and sliced it in two. One half he labeled `cheddar cheese’ and the other half he named `Partridge Farms cheddar cheese’. He then asked subjects to report their willingness to pay for each kind of cheese and discovered that on average they were willing to pay more for the `named’ cheddar. Grey hairs dismissed the work as not accounting for fixed cheddar cheese effects which so incensed Bickerstaff, that he went on to test his hypothesis on Red Leicester, Camembert, Wensleydale, Limburger and Stinking Bishop.

Bickerstaff subsequently went on to test the hypothesis on humans and discovered that papers written by `named’ professors were ranked more highly than the same paper written by a professor with no such honorific. On the strength of this Bickerstaff persuaded the dean of Empire State’s business school to raise money to endow a chair for every faculty member in the School. Within two years the publication output of the school had doubled and it had risen ten places in the rankings. The strategy was not without controversy. The University’s  academic senate thought this cheapened the idea of chaired professor. In a compromise, it was decided to call the new positions ottoman rather than chaired professorships.

Professor Bernard Drapier, well known faculty gadfly and guardian of traditions has railed against the Institute for Wow. He says it is yet another example of the University’s subjugation to the military-entertainment complex: “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-entertainment complex. ”

Empire State University today announced a new Division of Linear Algebra and Information. It is the university’s largest program change in decades and helps secure its status among the country’s top Linear Algebra research and training hubs.

“The division will enable students and researchers to tackle not just the scientific challenges opened up by pervasive linear algebra, but the societal, economic, and environmental impacts as well,” the university said.

Empire State is in an elite group with Carnegie Mellon University, MIT, Stanford, and the University of Washington in the caliber and scope of its linear algebra program, said A. N. Other, chief executive of the Plutocrat Institute of Artificial Intelligence, a computer-science professor at the University of Ruritania, and a tech entrepreneur. In creating the new division, Empire State is responding to two issues, Other said. The first is a large, chronic shortage of well-trained linear algebraists. The second is what value a university can add when technical courses are widely available through platforms like Coursera and Udacity. In emphasizing interdisciplinary training among scientists, engineers, social scientists, and humanists, Empire State firmly integrates linear algebra into its prestigious academic offerings, he said.

Empire’s move follows MIT’s announcement last month that it was investing $1 billion in a new college of linear algebra. But leaders at Empire State say their disclosure of the division today was driven by an imminent international search for a director, who will hold the title of associate provost, putting the program on an institutional par with the State’s colleges and schools. They explain that in creating a division rather than a new college, they are reflecting the way linear algebra has become woven into every discipline.

Full article at the Chronicle of Higher Ed.

My students often use me as a sounding board for their new ventures. A sign that the modern University could pass for a hedge fund with classrooms. The request brings a chuckle as it always reminds me of my first exposure to entrepreneurial activity.

It happened in the most unlikeliest of places as well as times. A public (i.e. private) school in pre-Thatcherite England.  England was then the sick man of Europe and its decline was blamed upon the public schools.  Martin Wiener’s English Culture and the Decline of the Industrial Spirit, for example, argued that the schools had turned a nation of shopkeepers into one of lotus eaters.

Among the boys was a fellow, I’ll call Hodge. He was a well established source of contraband like cigarettes and pornographic magazines. He operated out of a warren of toilets in the middle of the school grounds called the White City. Why the school needed a small building devoted entirely to toilets was a product of the English distrust of indoor plumbing and central heating.

One lesson I learnt from Hodge was never buy a pornographic magazine sight unseen. The Romans call it caveat emptor, but, I think this, more vivid.

Hodge was always on the look out for new goods and services that he could offer for a profit to the other boys. One day, he hit upon the idea of buying a rubber woman (it was plastic and inflatable) and renting it out.  The customer base consisted of 400 teenage boys confined to a penal colony upon a wind blasted heath.

Consider the challenges. How was he to procure one (no internet)? Where would he hide the plastic inamorata to prevent theft or confiscation by the authorities? How would he find customers (no smart phones)? What should he charge? What was to prevent competition? And, of course, what happened? All, I think, best left to the imagination.



Chu Kin Chan, an undergraduate student from the Chinese University of Hong Kong, has collected the placement statistics of the top 10 PhD programs in Economics from the last 4 years. You can find the report here. In it you will find the definition of top 10 as well as which placements `counted’. Given that not all PhD’s in economics who get academic positions do so in Economics departments, you can expect some judgement is required in deciding if a placements counts as a `top 10′ or `top 20′.

The results are similar to findings in other disciplines (the report refers to some of these). The top 10 departments place 5 times as many students in the top 20 departments as do those ranked 11 through 20. If you score a top 10 placement as +1, any other academic placement as a 0 and a non-academic placement as a -1, and then compute an average score per school, only one school gets a positive average score: MIT.

Chan also compares ranking of departments  by placement with a ranking  based on a measure of scholarly impact proposed by Glen Ellison. What is interesting is that departments that are very close to each other in the scholarly impact rating can differ quite a lot in terms of placement outcomes.

Read in tandem with the Card & Della Vigna study on falling acceptance rates in top journals and the recent Baghestanian & Popov piece on alma mater effects makes me glad not to be young again!

In England, a number of students who took the GCSE  mathematics test have been complaining about a question involving Hannah and her sweets. Here is the question:

There are n sweets in a bag. Six of the sweets are orange. The rest of the sweets are yellow. Hannah takes a random sweet from the bag. She eats the sweet. Hannah then takes at random another sweet from the bag. She eats the sweet. The probability that Hannah eats two orange sweets is 1/3. Show that n^2-n-90=0.

Not a difficult question. I would lengthen the last sentence to read: Use this information to show that n must satisfy the following equation. But a pointless one. It gives the study of mathematics a bad name. How is it we know there are only two colors of sweets in the bag without knowing n? How is it we know that there are only 6 orange sweets without knowing how many yellow ones there are? Why can’t I work out n by emptying the bag and counting its contents? In short, students are asked to accept an implausible premise to compute something that can be done simply by other means.

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